Definition of Loss Montana Code Annotated § 33-24-102

COMMISSIONER OF SECURITIES & INSURANCE MONICA J. LINDEEN COMMISSIONER ADVISORY MEMORANDUM OFFICE OF THE MONTANA STATE AUDITOR TO: FROM: DATE: All Property and Casualty Insurers Licensed in Montana MONICA J. LINDEEN Commissioner of Securities a Montana State Auditor October 31, 2011 DEFINITION OF TOTAL LOSS MONTANA CODE ANNOTATED ~ 33-24-102 The Office of the Commissioner of Securities and Insurance, Montana State Auditor (CSI), has recently been asked to clarify the method for determining "total loss" under Montana's valued policy statute. The valued policy statute sets forth the calculation used to determine damages when an insurable event results in a total loss of an improvement to real property. Under Mont. Code Ann. 933-24-102, when an insured improvement is,so adversely affected as to be considered a total loss, the value of the insured property lost is conclusively presumed to be the full value of the insurance policy. The term "improvement" includes all buildings and structures situated upon or affixed to the land. This definition encompasses mobile and manufactured homes considered "permanently located" under the statute. Meccage v. Spartan Ins. Co. (1970), 156 Mont. 135,138-139,477 P.2d 115,117; Mont. Code Ann. 915-1-101(1)(i) (2009). For the purposes of the valued policy statute, a total loss occurs when an improvement to real property is so significantly damaged that it no longer retains its '''identity and specific character as a building.''' Meccage, 156 Mont. at 140, 477 P.2d at 117 (quoting Oshkosh Packing & Provision Co. v. Mercantile Ins. Co., 31 F. 200, 204 (E.D. Wis. 1887). It is not necessary that the improvement or its component materials be totally destroyed for a total loss to arise. Nevertheless, the damage incurred typically must be grave to characterize the improvement as a total loss. Meccage, 156 Mont as a building.''' Meccage, 156 Mont. at 140, 477 P.2d at 117 (quoting Oshkosh Packing & Provision Co. v. Mercantile Ins. Co., 31 F. 200, 204 (E.D. Wis. 1887). It is not necessary that the improvement or its component materials be totally destroyed for a total loss to arise. Nevertheless, the damage incurred typically must be grave to characterize the improvement as a total loss. Meccage, 156 Mont. 135,477 Phone: 1-800-332-6148/ (406) 444-2040/ Main Fax: (406) 444-3497 Securities Fax: (406) 444-5558/ PHS Fax: (406) 444-1980/ Legal Fax: (406) 444-3499 840 Helena Ave., Helena MT 59601 Website: www.csi.mt.gov E-Mail: csi@mt.gov P.2d 115; Group Von Graupen v. Employers Mut. Fire Ins. Co., 259 F. Supp. 934 (D.P.R. 1966); Oshkosh, 31 F. 200; Hinkle v. N. River Ins. Co., 70 W. Va. 681,75 S.E. 54 (W. Va. 1912); O'Keefe v. Liverpool, London & Globe Ins. Co., 140 Mo. 558,41 S.W. 922 (Mo. 1897). This test for determining whether a total loss has occurred applies to all improvements, regardless of type. If you have questions, please call the CSI Legal Bureau at (406) 444-2040.